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RLI Corp.'s (RLI) Q2 Earnings Beat Estimates, Revenues Miss

Zacks Equity Research

RLI Corp.’s RLI second-quarter 2019 operating earnings of 66 cents per share surpassed the Zacks Consensus Estimate by 13.8%. The bottom line increased 10% from the prior-year quarter.

RLI witnessed improved premiums across most of its product lines along with increase in net investment income in the reported quarter.

RLI Corp. Price, Consensus and EPS Surprise

RLI Corp. Price, Consensus and EPS Surprise

RLI Corp. price-consensus-eps-surprise-chart | RLI Corp. Quote

Operational Performance

Operating revenues for the reported quarter totaled $224.5 million, up 1.6% year over year. This upside can be attributed to higher net premiums earned and net investment income. However, the top line missed the Zacks Consensus Estimate by 1.1%.

Gross premiums written increased 5% year over year to $283.3 million. The uptick can be attributed to solid performance of Casualty and Property segments.

Total expenses increased 6.1% year over year to $197.8 million, primarily due to increased insurance operating expenses, loss and settlement expenses, policy acquisition costs, interest expense and general corporate expense.

Net investment income rose nearly 16.6% year over year to $17 million. Total return from the investment portfolio was 2.9%.

The company reported underwriting income of $14.9 million, which increased 5.7% from the year-ago period. This upside was due to solid results at the Surety and Casualty segments, partially offset by soft performance of the Property segment.

Combined ratio improved 180 basis points year over year to 92.8%

Financial Update

The company exited the second quarter with total investments and cash of $2.4 billion, up 10.1% from 2018 end.

Book value was $21.43 per share as of Jun 30, 2019, up 21% from the figure as of Dec 31, 2018.

Long-term debt was $149.2 million, up 0.1% from Dec 31, 2018.

Statutory surplus improved 9.7% to $984.9 million, up 18.7% from Dec 31, 2018.    

Return on equity was 20.7%, reflecting an increase of 1100 basis points.

Net cash flow from operations declined 11.9% year over year to $74.6 million in the quarter under review.

Dividend Update

On Jun 20, 2019, the company paid out a cash dividend of 23 cents per share. Dividends totaled $603 million in the last five years.

Zacks Rank

RLI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Release

The Progressive Corporation PGR recently reported second-quarter earnings, which surpassed expectations.

Upcoming Releases

The Travelers Companies, Inc. TRV will release second-quarter 2019 earnings on Jul 23. The Zacks Consensus Estimate for the same stands at $2.31 per share, suggesting 27.6% year-over-year increase.

Chubb Corporation CB will release second-quarter 2019 earnings on Jul 23. The Zacks Consensus Estimate for the same is pegged at $2.58, indicating year-over-year decrease of 3.7%.

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